Question:
We’re going to go with getting started. James McClendon says, no investment money, bad credit; how can I get started?
Answer:
Well, James that’s a fantastic question and the answer is, follow the system. It’s just that simple. If you follow the system, generate the leads…and of course, if you don’t even have money for generating leads, then you’re going to have to spend energy. It’s an energy-money exchange. The more money you have the less energy you have to give to get leads. The less money you have the more energy you’re going to have to give, James.
That means that you’re going to get the newspaper and you’re going to start making outbound calls to both for-rent and for-sale people in the newspaper. James you’re also going to get flyers and flyer neighborhoods where you invite them to bring you a lead or you’ll buy their house and you’ll pay a referral fee when you purchase the home. You’ll have to invest a little bit of funds in that. I also want you to make outbound calls to realtors, to mortgage brokers, to bankers. There are lots of folks that have leads all you have to do is get in contact with them. But you’re going to have to give up that energy to get those leads. You’re going to have to really hunker down but I guarantee you that you can get leads.
Once you get the leads, follow the system. Use the cost to sell worksheet. Work backwards from what the seller wants. Use all the techniques that I teach you and you’re going to get to a final number. That final number is a discounted number. In most cases you can take over the existing financing on the property therefore, you don’t require any money. James, another part of our system is that the seller will pay you to buy their house, so that could generate some good money for you and quickly. But James, I’m going to tell you one thing, go to work. The time is now. The time is right. This is an absolutely incredibly good time for you to buy real estate so you’re going to need to put an action plan in place and do that.
That’s exactly what we do at the Millionaire Jump Start. If you haven’t already attended the Millionaire Jump Start, you need to. The next one is in Philadelphia, Pennsylvania July 21st and 22nd and then there is going to be one in September in Orlando and November in Las Vegas. So be sure and get yourself to one of those events, because I teach all of this there and you actually walk out with a detailed manual where we actually create a business plan, a marketing plan, and so many things that you need to actually jump start your business.
All of you on the call, if you haven’t been to Jump Start yet, you need to get yourself registered.
Question:
Okay, question about deal structuring. Ron Brown says, hi Lou, I just returned from MPI. I have a subject to deal as follows: value $206,000 mortgage, $165,000 IRS lien, IRS lien $40,000. This is a deal only if I can eliminate the IRS lien. What should I do? Thank you, Ron Brown.
Answer:
Well, Ron, good news. The IRS will release liens. What you’ll need to do is find out the details about the lien and there’s a contact person right on that lien. Call that lien officer and find out the details about releasing the property from the lien. Many times they’ll release the property and keep the lien against the individual, the taxpayer.
First you want to find out the details about the lien itself and then go from that point on. It can be released especially when you can show the IRS that the property is potentially in foreclosure and the property is about to get lost anyway. There is a lien release procedure and the IRS will provide that to you in the publication. If you have any other questions about that let me know. We can access that information about the lien release procedure. I’ve talked with my computer guy, Bruce, many of you know and Bruce has got access to that information. He’s going to be posting it to the backside of your investor websites so you will be able to check it out there. It will be titled IRS tax lien release. Under the resources section of your investor websites, go to resources and then you’ll find the details for IRS tax lien releases right there.
Question:
All right, we have a buying question here from Joan who says, what are the advantages and disadvantages of advertising 24/7 recorded message? Wouldn’t that scare off some because they want to talk to a person?
Answer:
Well, Joan, I find that people want to first find out if they want to do business with you in the first place and saying that you have a 24/7 recorded message attracts them to call. If you use our voice-wiz system it captures their telephone number, so even if they hang up the system captures their number so you can call them back. Just say hi, just following up with you, saw that you called and got details about our program. Just wanted to follow up to see if you had any other questions; be glad to answer any questions that you have.
That’s the system you want and those of you on the call, if you don’t know what I’m talking about it’s the most incredible phone system. It costs you $100 to get set up. It captures all of your leads. It gives you unlimited mailboxes where you can actually use signs; you can use a different extension number and actually be able to track your marketing. You can find out where it’s from, so you use post cards, use a different extension number, you use a letter you use a different extension number and so on. You’ll be able to find out how effective your marketing is. It’s good stuff. It costs $50 a month. It eliminates all of your other telephones and telephone numbers except for your cell phone and it even allows you your own 1-800 number and a whole bunch of other stuff like faxes, a fax service, and a lot of other goodies.
We’ve built script for the service so that when you call in and you can actually get another telephone number for $3.00 and that gives you a buying number and a selling number and that actually gives you scripts for both buying and selling. Those scripts are designed to really take people through the process and eliminate you having to do anything. So, we have the 24/7 recorded message and I absolutely believe in it. At the beginning of the message it says, anytime you want to talk to a live person, just press X, and they press that button and they can go right to you. But here’s the other good thing about the system is it redirects the calls. So, if you’re not available it just sends it to another number and if you’re not available at that number, it sends it to another number and so on. You just set it up in the system and it takes it from there. Really, really good stuff. It’s called our Voice-wiz. Anyone who’s interested in that just call our office at 1-800-578-8580 and they’ll get you all the details about that. Good question Joan.
Question:
All right. Now we’ve got Roger who has a buying question. Lou…excuse me this is Paul – Paul H. Lou, how do I approach a nursing home administrator on helping new…sorry I can’t read that word…new something liquidate their homes because they have too much equity to get assistance from State?
Answer:
If they have too much equity, you can help, because the thing is that with that too much equity they can use that equity to pay for their nursing home care until it runs out. When it runs out then the Medicaid can take over. You definitely can talk with the nursing home administrators and say listen, what we do is we provide solutions. We buy houses and I’m sure that you have clients that come in here from time to time and they need to liquidate their real estate. We would be glad, number one, to work with your clients; number two, to pay you a referral fee for telling us about those folks. Do you have anyone now that you’re working with that we might be able to assist in? If they say no, then you put them up on your follow up calendar to call them every three weeks. Remember that Lou Brown is big on follow up. You must calendar these things and follow up and when you do that, you will be able to get leads that nobody else knows about and nursing homes are such places that you can get piles of leads that nobody else knows about.
Question:
Let’s see, more buying questions. We were told that a number of States have made lease-options illegal. Is this true?
Answer:
Well, William, that’s absolutely not true. There’s only one state, and that’s Texas, that has not outlawed lease-options, but what they’ve done is they have regulated lease-options and one of the things they’ve done is said, listen, you can do lease-options, but if it extends beyond six months, then you can’t do it, except if the lease and the option are done at different times. That means that if the lease and the option are done at the same time, that means contemporaneously or simultaneously, then you cannot do it past six months. Let’s say that we do a lease for you know, a full one-year lease, but we want to give our client the option to buy the property. We want to give him a nice long-term option. We can do that, but we want to do is do that like 30 days later after you’ve done the lease and that’s the best methodology that gets it done.
I just added that on as a side tip, because that’s not really what your question was. Your question was a number of States have made these options illegal and that is not true; only one that we know of, and we are following that very closely through NAHRE, which is the National Association of Home Remodelers and Investors Association. What they do is they are a lobbying group both locally and nationally that takes care of us as real estate investors to make sure that we don’t have any problems out there. I highly encourage you, if you want to send your donation through StreetSmart, to get involved in doing that and get the – sorry I’m just handing my phone to Bruce, it just went off – and get involved in that Association. We collect at our events for NAHRE and we send in checks monthly to them. We encourage you to get involved. We’d love to do it under the StreetSmart banner so we can show that we care about the organization and show the power of Wal-Mart and how many of our licensees care about it as well.
We’re asking for donations of $250 from all of our licensees because we definitely want to kill off any regulation that can come down our pike. That has been successful helping to fund the type of lobbyists that are necessary in these States to head if off before it grows wings because the issue is – it’s only in one State right now – but if it gets in a significant number of States it will sweep the country. People use these as a political forum for being able to stop something, but it also makes them look good and the thing is that they upset the apple cart where there may be one or two bad apples and they are spoiling the whole bunch here. We want to be able to bring our side of the story to the table and say, listen, what we do is we help people, we don’t hurt people and by the way, we improve and restore neighborhoods too. Let us show you some of the properties we do. Let us show you some of the people we’ve helped, both sellers and buyers. Let you hear direct from real people who really appreciate what we do. Let them hear the other side of it, but unfortunately that is not going to happen without the proper funding. All of your involvement in that is very, very much appreciated. If you’re interested in donating to NAHRE call our office, 1-800-578-8580 and we’ll be more than happy to help you.
Very good question. Actually it wasn’t a question but just me pontificating and saying we have to help out our industry because if you think about other industries such as Realtors – highly regulated, insurance – highly regulated; there’s all kinds of things out there that are highly regulated.
Question:
All right, next fine question is; how do you get the bank to modify the terms of a loan when you take the property subject to? That’s from Rick.
Answer:
Well, Rick, the answer is we get them to modify the loan by giving them the reason that it makes a whole lot of sense. Remember that we, the StreetSmart way, is to call the bank as the financial advisor working with the Jones’ and of course trying to solve their problem and the Jones’ of course have problems. We unfortunately cannot pay all of the money that they are in arrears right now, but we can pay some. Maybe we have $1000 to work with. We would like to take the arrearage and put the rest on the back end of the loan; can you work with us here. If they say no, then the next step is to do a payment plan on the arrearage and once we get that worked out with the bank, they will provide the modification agreement. They will provide a write up of what they’ve agreed to and that will be signed by your client, and that’s the end of the story. That should be an easy process there, Paul, excuse me Rick.
Question:
We have the next question; for lease-option tenants if they don’t make payments, can you evict them or do you have to foreclose on them?
Answer:
Well, the good news here, James, is that tenant can…you do not have to foreclose on a lease-option tenant. You may evict them. Now one important point is you definitely want to use the StreetSmart paperwork because the lease and the option are different in my system. The lease, or the rental agreement we call it, is a separate document from the option agreement. The option agreement – good news here – is contingent upon a cross-default clause that says, if they fail on one agreement, they fail on the other agreement as well. That wipes out their option to buy whenever they default. It’s an automatic wipe out at your option, because it’s an option ____(17:41) as to whether the option can stay in place our not. It’s a real good method to get things done. Good question James.
Question:
All right, next question. On the bottom of the – this is Jim ____(17:58) – on the bottom of the quick claim deed it says not to file with the county. This seems contrary to what we were told. What do we file on a subject-to to protect our purchase interests?
Answer:
Here’s the deal, Jim. When we assist the seller in placing their property into their trust they are the beneficiary. That deed is recorded transferring the property from the seller into the trust. That’s what is shown on public record. Then when the seller decides to assign their beneficial interest in that trust they assign that beneficial interest either to you, to your LLC, to your corporation or to another trust. When they do so it is transferred from their name into their trust and when they do that then they actually have a situation where all of those things are completely out of the control and the purview of the seller at that point. That’s then transferred into another trust. We wouldn’t want that to be shown on public record. That’s a private document, between the beneficiary of the land trust, and the new beneficiary who they are assigning to. In other words, the trust will stay in place and that deed will stay in place, but the beneficial interest will not. I hope that cleared it up for you Jim; good question.
Question:
Next buying question and another subject-to question is; what determines the best time for a subject-to – Vickie.
Answer:
Vickie, the answer is you have to look at your cost of funds and your source of funds. When you look at what it’s going to cost you to raise money, the best time to do a subject-to is whenever you can take over that existing financing that’s going to cost less than you could raise the money for on your own. That coupled with the fact that you do not have to qualify for a loan, you don’t have to go to the bank, you don’t have the delays that go with that; all those things are details that are important. This is an extremely important situation here where you actually are in a position to protect your people.
Question:
Now buying subject-to, thanks – Bill from Chicago. When the seller gives you their home subject-to how is it that they can still get a loan for another property? Great question Bill.
Answer:
When they sell that property to you, that mortgage definitely shows up on their credit report. When that shows up, of course the mortgage lender is saying, well look, you’ve already got a loan in your name and they merely explain to the mortgage broker, yes, but I have sold that property. They say, well how…can we have some proof to document our file, and they say yes, call the people who bought it. Then you tell your client to have the mortgage broker call us and then what we do is fax over to them a copy of the recorded deed. When they see that, they see obviously the property has been sold and that satisfies the question about the existing loan showing up on the credit report. That should take care of that problem for you and all of you on the phone, because that comes up a lot. That’s a very common question.
Question:
All right, Alice says, is there a way to take a property subject-to without having the taxes increase?
Answer:
That’s a little gray area in our technique of taking over the property subject-to, which of course if you’re on the call and you don’t understand what subject-to means, it’s merely that you are taking over the deed subject to the existing financing on the property. In other words, the financing remains in place while we get the deed to the property. It remains as a lien against that deed. I think what you’re referring to Alice is the property taxes and the challenge is that whenever a deed transfers they typically set it up for someone to have to reapply for homestead exemption. The owner of the property could reapply as a beneficiary of a trust so that the taxes could remain as a homestead exemption. However, typically when it transfers that does pretty much kill off the homestead and unless there is a real homeowner living in that property, that is lost. Great question Alice.
Question:
Informing a new…let’s see. I’m going to try to stay with all our buying questions first. Okay, here we go, we’ve got some short sale questions.
If the bank does not tell what the BPO comes out to how are we going to make a good offer?
Answer:
Well, William, the answer is, the way we are going to make an offer is to follow the system. The system says that first we must determine what the value of the property is. You’re going to use your Comp-wiz to do that. You go through and you put together all the like kind properties out of all the comps – they usually give you sixteen to twenty comps – and you’re going to pull the ones that are in that subdivision first and then compare them together and put a value on those. The next step is you want to, if the bank does not tell you what the BPO comes out to, the next step is to take your comps and put that on your cost to sell worksheet. Of course you’re going to work with the lower comp and then put that as the purchase price. Work backwards from their with all the costs to sell so that you can illustrate to the bank exactly what the final number is. That sheet will then tell you what a good number is. Of course William, good news that we’re not going to sell the property the traditional way, therefore, that will void all the costs of selling the property that you just illustrated to the bank using your cross to sell.
William, if you don’t have our short sale kit, it’s a very important tool. It’s $299.95 and it has all the forms you need to do a short sale and build a package for the lender. It’s very unique and it fits with our overall strategy of working with the bank as a financial advisor. It’s got the cover sheet, the HUD one closing statement, it’s got the repair estimates, it has all those things built into a package that you send to the lender. As a result of using that package we’ve found many, many people get short sales very, very quickly because they have the answers that the bank needs right there. Very important tool; call the office and let’s get you going in the right direction on short sales.
Question:
Next question is; when you have a short sale set in stone and then you decide you want out of it, what do you tell the mortgage company?
Answer:
You tell them that the buyer that you had lined up for the property unfortunately the loan has fallen through and you’re not going to be able as the financial advisor you’re not going to be able to recommend that they go forward on it, because obviously there is not buyer right now at that price. Could you please work with us here; if we were able to find someone else to buy the property would you work with us on that? Then you could come back with an even lower offer because you’ve got a new contract now at a lower price and maybe that then would make you happy with the price that the bank has agreed to at that point.
Question:
Another short sale question; how do you present your package when most of the banks and lenders are usually out of state?
Answer:
We present the package by faxing or e-mailing it to them; it’s almost always a fax. In some cases we overnight it if we have photographs and additional data that’s not easily faxable. We would love it if they would use e-mail, but almost none of them do, probably because they’d be nagged to death so they make us go through those hoops, which are fine; we just want to get that package in their hands. Good question Alice.
Question:
Okay, Alice has one more question about short sales here too. She says, what happens if the BPO and the price is different than your BPO dollars?
Answer:
That really is the crux of the issue when you’re doing a short sale, Alice, because if the BPO price is different than your offer you’re going to really justify why that BPO number is wrong; because remember the bank is looking for an independent uninvolved third party’s opinion of value and that opinion of value to them is gospel. You come along $10,000, $20,000, $30,000 below that, you had better be prepared to illustrate to them exactly why they should give you a lower price. You want to provide them with all kinds of pictures, documentation, and proof that perhaps the BPO agent did see. For those of you on the call who don’t know what a BPO is, that’s a Brokers Price Opinion. Typically it’s not a broker who gives the opinion, it’s an agent who is looking to just raise some cash today and the banks post these things to a website and realtors go there and they actually just access it and then they just go do the work in order to get the pay. It’s a great source of leads by the way, if you can get hooked up with one of these people that are doing a bunch of these. Just say, hey, I’ll follow in your footsteps and would love to get some more…we’ll give you some money for just giving us the lead when we close on the transaction. It’s a lot more than the bank is going to pay you for this BPO too, so you can do BPO’s and keep me in the loop on that.
Influencing the BPO is very important, number one, that they are going to get you the number you need. We use a number of techniques to get the BPO where we need including a long drawn out and detailed story about the seller’s situation where you can illustrate to the person who’s coming to do the BPO that really the solution for the seller rests in their pricing. Unfortunately they’ve got all these problems and could they please just get the price where you need it because you’ve got a client at that price. Play on the sympathy of the person who is there to get the BPO, Alice and you should do very well.
Question:
Now we’ve got a buying – short sale question from John S. who says, how long before the sale date foreclosure do you need to work out a forbearance agreement in order to have enough time?
Answer:
John, I would say today is a good day. You need to start on that as soon as you possibly can when you get the lead. As soon as you get it under contract with your seller or go ahead and get the deed from your seller, now you need to go work out the agreement with the banks. That can take some time, but if they’re working on a forbearance agreement then many times they’ll pull the property from foreclosure – they’ll stop the foreclosure – while they’re going through the process of doing the forbearance agreement. That’s a good way to handle that, John.
Question:
John also asks, on the BPO for short sale realtor, can the investor who is writing the letter also do the BPO?
Answer:
The bank wants to see third party involvement in any BPO so the idea that I give you in my short sale package is that we’re using our realtor to write up our BPO that matches our contract to the bank, so there the bank is seeing something that supports what they’re seeing. It should not be the person, who signed the contract, is the person who does the BPO. That’s not going to work John.
Then I think this is Sylvia – a lot of short sale questions tonight. This is really good and of course this is the right time for it, because the mortgage implosion is going hard. There is so much stuff happening out in the market place right now. We’re seeing banks do things that we never thought they would do. It’s just imperative that you get the right training on how to do short sales and how to evaluate deals. By the way we’ve got out Millionaire Deal Maker coming up in September and…Bruce what are the dates of that? The Millionaire Deal Maker is a very important event where we actually structure deals in class. You bring the leads to the class and there we actually structure them. Lots and lots of people get huge kicks. We split up into teams. The team comes up with multiple offers, because I want you to learn that there are more than just one or two offers that you can make on a property. There are up to 35 offers you can make and we’re going to do in class those things.
What is it Bruce? October 25th through the 28th that’s a four day event, October 25th through the 28th in Atlanta. We definitely want you to get there for that MDM training and call for the best discount now because if you pre-register you do get the lowest price and we also have time to work on a payment plan with you to get you to the right training. We break down short sales, forbearance agreements; we go into buying where the seller pays you to buy the house. We give you all the paperwork for the seller paying you to buy the house as well. Very, very important training; get yourself signed up for it and get on a payment plan right away. If you register now, we’ll even do zero interest on that so you don’t want to miss that. Call 1-800-578-8580 for that detail.
Question:
Okay, wow – good questions. We’ve got some legal questions here. Let me go into these. From Paul H. – Lou if you open an office and the town requires a license for the business, what type of business should we declare for the license – and you say not real estate.
Answer:
How about property management because isn’t that what we do. We do property management and I think that might be a good way to handle the requirements of the city there if you have to get a license.
Question:
Brian asks; do people give you the deed on the spot? Do they have it sitting around their house?
Answer:
No, they actually have their deed sitting around the house. It’s the deed that came from the seller to them. But when they give you the deed, you’re actually going to have to create a deed, and they’re going to sign it and it’s going to be a deed from them to you. Of course, I’m going to recommend that you do it from them to your trust and that’s very, very important that you do the paperwork right and that you get an appropriate deed for that transfer. If that’s not done right, you can lose. That’s another part of the overall strategy of training you how to do this the right way, because we don’t want you to fail when you’re putting these subject-to and strategies together. We want you to be able to do it just exactly the way you should.
Question:
Another legal question came in. What does a non-judicial state mean? Mark.
Answer:
Those of you have heard me talking about foreclosures, I say there are judicial foreclosures, and there are non-judicial foreclosures. In some states you actually have to go through the process of actually filing a lawsuit with the state. It is done at the county court house and there’s a Judge that has to do a hearing and all these sort of things. That’s true in Florida, South Carolina, and many other states. But the other states, that have non-judicial foreclosures, the lenders can merely file in the newspaper. They can follow the procedure that is in the mortgage and they do not have to go through the court system for that. That’s a good thing when you can avoid having to go through the court system. You may want to encourage your state to do that very thing.
Question:
We’ve got a couple of borrowing questions here. From Jason – Jason says, can you get equity lines of credit from homes you have bought subject-to?
Answer:
Jason, that’s good work if you can get it, but the answer is possibly – isn’t that interesting – possibly, because the fact of the matter is you have control of the deed to the property and that’s what the lender is looking at. Even though there is an existing loan on the property, they are paying attention to the amount of the balance on that loan and they’re looking at the equity above that loan. That’s the amount that the trust who owns the property can get an equity line on. Isn’t that a good thing Jason? Very good question.
Question:
The next question is, if buyers don’t qualify for a regular loan, how do we qualify them for our houses?
Answer:
The answer is it’s called down payment. We want to get as much down payment as we can. Of course with our methods if they – this is the StreetSmart way – if they pay us 3 to 5% down on a lease-option and then they can’t hang with the property we can merely evict them and we don’t…since there option consideration was non-refundable…we don’t have to give them money back. But the way we qualify them is merely the amount of money that they pay. I think just about everyone on the phone would agree that, hey, if they have the money, you’ve got the house. Save for drug dealers, who we don’t want in our properties and anybody that is going to create a meth lab or anything – we don’t want those people on our properties – and people who breed Chow dogs, we don’t’ want them on our properties – but hey, other people with enough money, we want those in our properties.
Question:
Jason also asks; how do you find, approach, and secure private investors, those who you know, and those who you don’t know?
Answer:
Here’s what I recommend – you just start with a conversation, Jason, and all you say is, hi, let me tell you a little bit about my business. What we do is buy, sell, renovate, and manage properties. From time to time we have the need for funds and we work with private investors just like you to fund these transactions at very good interest rates. Tell me, do you have an IRA account, or do you have funds that you’d like to invest in well secured real estate. If so, then we’ve got a program for you. Then you shut up, Jason, and you take out my lender presentation kit and let the presentation kit take over from there because it will convince the lender to give you money, and it’s a very well laid out and well done kit. In fact, we had people at our MPI event just this past weekend coming to the microphone and saying, Lou, I used your kit and been able to raise $400,000, $600,000 and one guy over $1 million using that $79 kit that I’ve designed for you.
The rest of the story is in the borrowing system – that’s Volume 6. Borrowing tells you exactly what to do. It gives you the script and it has all the paperwork in there as well. The lender presentation kit is a companion to the Borrowing system and we definitely want you to get that with all the forms and calculators and all the details so that it allows you to be able to handle the transaction from start to finish all yourself. You don’t need a four-day boot camp on that. You just need the right paperwork and training to be able to do it yourself. If you don’t have the Borrowing System Volume 6, call the office at 1-800-578-8580 and it will tell you exactly what to do.
Question:
Now Maria asks – and this is another borrowing question – if the deal makes sense could you use a conventional lender?
Answer:
Well, sure you can Maria. I just teach you that there are so many alternatives to raising money. Of course, anytime that you have the credit and the deal makes sense, you can go to a conventional lender. I just merely teach you that I’ve been in business for 30 years and I’ve never been to the bank to qualify for a single family or small ___(42:35) family property. If you want to use your method you’re welcome to do that. That’s just not in my opinion the StreetSmart way to buy property if you can possibly avoid it.
Question:
Okay, let’s hit a few trust questions here. Bruce how am I doing on time? Let’s see…Mark Anderson – if trusts are done in Arizona but we moved to Iowa, do we need to redo them?
Answer:
Well, the answer Mark is no, you don’t have to redo them the trusts follow you, except for one variation on the theme. If the property that you own is still in Arizona then I would leave that trust alone. But if instead you sold the property and the trust is vacant and there’s nothing in the trust, then I would indeed redo the trust in Iowa, because the property that you’re going to place in that trust is now in Iowa. There’s a stipulation in the documents that say this is for purposes – excuse me, I’m not saying this right – this trust shall be construed under the laws of the state of blank, and therefore, if the property is going to be in that state then it would be a good idea to have the trust in that state as well.
Question:
The next question is Paul H. – Lou, taking title to new auto in trust when buying not leasing.
Answer:
Paul, what I would recommend that you do is tell the seller of the vehicle exactly what you’re going to do and you’re going to take title in the name of the trust and that the name of the trust and the trustee. You can be a driver on behalf of the trust and that can put the title in the right name. That’s easy to do. All you have to do is tell the seller of the vehicle exactly how you want it titled. They will send it to the state that way. The state will send you back the title exactly in that name. If you’re getting financing on the vehicle, then the lender will keep the title. In other words, they will send it to the state, the state will turn it around putting the trust as the owner and them the lender as the lien holder, then they will send the title back to the lender and they’ll hold it until you pay them off. Okay, good questions.
Question:
Another question is, please explain how the seller puts the property in a trust and how you end up with it – thank you, Joshua.
Answer:
Here’s the deal. Your Land Trust Volume 4, page 148; I want you to go there. There are all the details about buying property in trust subject to the existing financing. It tells you exactly what paperwork to use and it takes you step by step through the process. There is a checklist there and the forms are there and it tells you exactly what to do. Now, I will say this Joshua, that there’s a lot more to the story, because there is a whole process. In fact, I teach this at the at the Maximum Asset Shield Training, and that’s coming up – did you get that for me Bruce. Okay, he’s getting it for me. It’s August 23rd through 26th this year. It’s a four-day event here in Atlanta and we’re not only going to subject-to transactions there, we’re going to actually do a trust in class. So, you’ll bring all your paperwork – actually not all your paperwork – you’ll just bring a deed to class, and there you’ll actually at your desk be able to take the property and transfer it into trust right there in class. So, you get the full experience of that and I also teach you exactly how the process works with a lender and how we go through the subject-to.
We’re also going to do a personal property trust there so you’ll learn how to open a bank account and how to work with a vendor. Excuse, moving a vehicle into trust that is, and exactly how that works and then we’re also going to do a living trust there where you’re going to actually end up having your estate planned while you’re at the event and the paperwork to do it. You’re actually going to go through that process and do it yourself right there at the event. You’re also going to learn about LLC, corporations, limited partnerships and how they fit in with our system as beneficiaries of the trust. It’s an ironclad way to do business, but the truth of the matter is, is that most folks don’t know all the different benefits of trust. They might know one or two, but they don’t know the 30 different ways that we can hold title in trust and all the benefits of holding title in trust. We’re going to go over all of that at the event. Really, really great question there because subject-to comes up all the time and obviously we want to save as much money as we possibly can when doing that.
Question:
All right, the next trust question is; when you put your property in trust each property has its own trust. Must each one have a different trustee?
Answer:
Good questions Melanie, I believe its Melanie Jones. Melanie, here’s the deal. When you place your property in trust, obviously we don’t go nuts trying to find trustees all over the place. What I recommend you do is use one trustee for about five or six properties and these are all the ones that just relate to the property going into trust. What you’re going to do is have maybe one trustee for each five or six trusts in that county, then a different trustee for another five or six properties in that county. But now we can take trustee #1 to another county and we might still have some privacy there and not connect all the dots of all our different trusts at one time. Really important information and vital to do it that way. There are lots of things you can do with trusts, naming strategies, there is just so much you can do from a privacy and asset protection standpoint, you really definitely want to set yourself up to win and that’s what helps you get the benefits of trusts. Some people ask me, Lou, do I have to have a corporation or an LLC; do I have to have the limited partnership and do I have to have all these things done before I can get started in real estate. The answer is absolutely not. The reason is, is that the strategy of the trust and the ease of doing the trust is absolutely critical.
Question:
The next question is; how do I fill out paperwork of a trust in order to assume someone’s mortgage. I never did this before – scared I’ll do it wrong.
Answer:
There are a couple of ways Phil that you’ll do it and I don’t blame you for having that question, because it is an issue that comes up from time to time. Here’s what you’re going to do. Follow the system; if you have questions, then if you’re part of our direct Q and A program, all you have to do is fax or e-mail those in and we’ll take a look at them and make sure that you haven’t made a blatant error. When you come to the live training, we actually give you software there that allows you to fill out one page and it auto-fills all of your documents so you can’t possibly make a mistake because the computer does it for you. I don’t give that to you as part of your basic program, because I know that people can make mistakes and they would rely too heavily on the auto-fill and not really understand what they’re doing. So, I make you go through line-by-line and item-by-item, when you have the basic program. Once you’ve been trained by Lou Brown for four days on the use of trusts, then I feel you are certified, in fact you become a certified trust specialist right there at the event, and there we present you with the auto-fill documents that do it for you. Not only that, we don’t stop there, we also turn it on, on the backside of your Street Smart investor websites so you can then have access to the auto-fill forms from any computer any where in the world. You can actually fill out the sheet and press submit and boom, the whole thing fills out automatically. Press print and you’ve got all your documents right there. How good does that get?
By the way, if you haven’t registered yet for the MAS Training, you definitely, definitely need to get there. I don’t care what you’ve seen in the past, it does not match what we’re going to do there. You absolutely need this training and if you register now you’ll still get the discounted price and you can even work out a payment plan when you call the office. Just say that you heard it on the call and call the office and say, look I heard that there is a discounted price for early registration and I also heard that I can work out a payment plan with you and they’ll take it from there. Just mention the call and mention that Lou said, and that should get you registered. Get registered now. Don’t waste your time and don’t wait for the event to be filled. This event ends up with a waiting list every single time so now is the time to get yourself registered. Call 1-800-578-8580 to make sure that you get yourself registered.
Question:
We’ve got another trust question. Using land trusts to bypass the due-on sale clauses considered to be a deceptive practice. PAC trusts and NEH trusts _____(54:09) claims to eliminate this problem by using seller-investor-buyer beneficiaries; please comment.
Answer:
Nahari, you’re absolutely right. The transaction could be construed, as deceptive practice, however, let’s review. If you do it the way that I’m describing, the lender doesn’t care. The lender is not going to call the loan due if you don’t shake it in their face. How are they going to find out that the transfer has occurred? With my methodology you have the seller transfer their property into their trust. While it is in their trust they appoint you as the manager of the property and give you the authority to work with the bank. Under that management agreement you have the authority to work directly with the bank and in fact, the seller has signed giving you the authority to do so. All of that is in your documentation. Then after they sign that, later, like maybe a few minutes later, they transfer their beneficial interest in the trust to you, to an LLC, a corporation or to another trust. That is all good stuff because once it transfers from the seller to you, the seller no longer have control over that land trust; you do. What that means is that the lender doesn’t even know that this transaction occurred.
With the other trust that you mentioned the expense is large, because they charge you a fee to do that transaction for you. They also have you leave the seller in as a partial beneficial interest in the trust; which I think is a train wreck. I don’t want the seller anywhere near that property any time after I’ve bought the property. Let’s just get straight here that I’m not going to take the risk. I don’t think that makes any sense at all. Plus, I don’t need a third party to receive my check every month and then send it off to the bank. I can do that quite nicely, thank you very much, and I’ve been doing that for over 20 years that way and I’ve never had a loan called, I’ve never had a lender shake a stick at me, I’ve never had any problem; it’s just not an issue. I understand that companies create things in order to create an income stream for themselves on a monthly basis and also a hunk of money every time they help you do the transaction. I understand that and that’s a good business model. However, it’s not one that I recommend for a StreetSmart student. Our licensees have the proper methodology, the proper paperwork, the proper forms to be able to do it themselves and to save an absolute fortune in doing it themselves. That’s what I recommend you do. I definitely want you to come to the training so that you know and you become a certified trust specialist. You know exactly what to do and when to do it.
Question:
Haines Parker has a question about closing attorneys. He said, Lou, could you recommend a few great closing attorneys in Atlanta, especially in the Cobb County area who are StreetSmart.
Answer:
Well Haines, since you’re in our local market I would say call the office and we’ll give you the number of a couple of people who know exactly how our deals work. I’m not going to give that over the phone, but do call the office and we’ll be glad, since you are a coaching student, to give you that information.
Question:
We’ve got a private money loan question, which I had borrowing questions a few minutes ago but I missed this one. Nelson Page says, Lou you said on one of your CDs that with your ease money loans all an investor has to do is bring a paid hazard insurance policy to closing since closing costs and points are financed into the loan. Does that still apply and do you require monthly interest payment?
Answer:
Good news Nelson; yes that is still available. You go to StreetSmartinvestor/Lending with a capital “L” and you can fill out the application right there on line. There is a box at the top for loan or partnership. Let me tell you the distinctions between the two. With a loan there is typically 5 points and 15% interest. Yes, there are monthly payments on that. With a partnership there is the cost of funds is also included in a partnership but you do not have to raise the money. You’re just bringing the deal to the table and we raise the money and there are no payments and there is no qualification except for the property itself. So, if you’ll put the details on the sheet you can avoid even having monthly payments on a partnership but not on a monthly loan. I hope that helps Nelson; that’s a good question.
Question:
One more trust question. I missed this one too. Mike Oakes asks the question, Hi Lou – Mike Oakes from Jacksonville. I am planning to place my properties in trust. I was planning to put each one in a land trust and into a personal property trust with a beneficiary of each one being a common LLC. This is for my rental properties. Does this sound like a good idea?
Answer:
First of all, let me answer that question Mike, the answer is yes, that sounds like a great idea.
Question:
So then you go on to say, if so, is this the proper order or can I place them in a land trust as personal property?
Answer:
Okay, let’s answer that one next. No, you can’t place them in a land trust as personal property, but you can have a personal property trust as the beneficiary of a land trust. If you have personal property you want to put that into a personal property trust.
Question:
Also, if I use a name instead of a number for the trust, do I have to register for fictitious names?
Answer:
No, you don’t. The trust itself is an entity in and of itself so it doesn’t have to have a fictitious name registration. In fact, the trust is indeed the owner of the property. It’s not fictitious at all. It’s actually the owner, the trust, and the trustee. There’s nothing fictitious about this.
